Alabama – More than the Heart of Dixie

The United States Census Bureau’s Census 2000 estimated the population of the State of Alabama at 4,447,100. Approximately 75 percent of the adult residents had graduated from high school and about 19 percent had earned a bachelor’s degree or higher. The capital, Montgomery, has a population of 201,568.

From an employment perspective, the primary industries in Alabama are:

From a property/casualty insurance perspective, Alabama accounted for $5,639,718,000 of direct written premium in calendar year 2003. Countrywide the aggregate was $445,028,265,000 of P/C insurance written. Alabama’s calendar year 2003 loss and defense and cost containment ratio of 70.8 percent was above the comparable countrywide ratio of 67.6 percent. It was interesting to note that Alabama’s aircraft loss ratio for calendar year 2003 was 175.6 percent compared to the countrywide 2003 average of 42.6 percent.

What surprised me the most was that Alabama farmowners insurance premium for calendar year 2003 was $44,452,000. I expected it to be more. However, in a state with 14,855 farming, fishing and forestry employees, perhaps that is about right.

The Alabama economy is stagnant. The employed civilian population comprises approximately 43 percent of Alabama’s population. It is distributed as follows:

Given the anticipated growth in the number of jobs located in Alabama and the need for diversification of the Alabama economy, I would expect the growth rate of Alabama’s P/C marketplace, as measured by direct premium written, to approximate the growth rate experienced on a countrywide basis.

Joseph L. Petrelli, is president and founder of Demotech Inc. (www.demotech.com), a Columbus, Ohio-based financial analysis and actuarial services firm. Petrelli is a member of the Casualty Actuarial Society, American Academy of Actuaries and the Conference of Actuaries in Public Practice.